Everyday I download "free" white papers from the Web in exchange for my contact information. I usually read the "free" newsletter that inevitably follows, at least once, but I never answer the follow-up calls that ring on my fax machine. Occasionally I make a purchase as a result of this exchange. This is how the "free" economy works for me and the businesses who court me.
Twitter continues to be free. But Twitter hasn't ruled out charging for future services or keeping it free by adding advertising. Hopefully Twitter will conclude that "free" can be a successful e-marketing strategy much as Google has with Mail, Analytics, YouTube, etc.
In a 2008 special report in Wired Magazine titled “Free! Why $0.00 Is the Future of Business“, author Chris Anderson presents a few case studies in detail that still make sense today. The article includes an analysis of six broad categories of business models leveraging the free economy:
- Freemium: What’s free: Web software and services, some content. Free to whom: users of the basic version.
- Advertising: What’s free: content, services, software, and more. Free to whom: everyone.
- Cross-subsidies: What’s free: any product that entices you to pay for something else. Free to whom: everyone willing to pay eventually, one way or another.
- Zero marginal cost: What’s free: things that can be distributed without an appreciable cost to anyone. Free to whom: everyone.
- Labor exchange: What’s free: Web sites and services. Free to whom: all users, since the act of using these sites and services actually creates something of value.
- Gift economy: What’s free: the whole enchilada, be it open source software or user-generated content. Free to whom: everyone.
A related article can be found on trendwatching.com. The Amsterdam-based trendwatching agency, published a Trendreport titled “Free Love” which is all about the ongoing rise of ‘free stuff’, and the brands already making the most it. The report is free to read online or to download as a PDF.
In a soon to be release book, Free: The Future of a Radical Price, Chris Anderson makes the compelling case that in many instances businesses can profit more from giving things away than they can by charging for them. Free is the business strategy that may well be essential to a company's survival.
In Free, which will be released on July 7, Chris Anderson also points to the growth of the reputation economy; explains different models for unleashing the power of Free; and shows how to compete when your competitors are giving away what you're trying to sell.
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